In: Accounting
Budgeted Income Statement and Supporting Budgets
The budget director of Birds of a Feather Inc., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for January:
Birdhouse | 6,000 units at $55 per unit |
Bird feeder | 4,500 units at $75 per unit |
Direct materials: | |
Wood | 220 ft. |
Plastic | 250 lb. |
Finished products: | |
Birdhouse | 300 units at $23 per unit |
Bird feeder | 240 units at $34 per unit |
Direct materials: | |
Wood | 180 ft. |
Plastic | 210 lb. |
Finished products: | |
Birdhouse | 340 units at $23 per unit |
Bird feeder | 200 units at $34 per unit |
In manufacture of BirdHouse: | |
Wood | 0.80 ft. per unit of product |
Plastic | 0.50 lb. per unit of product |
In manufacture of Bird Feeder: | |
Wood | 1.20 ft. per unit of product |
Plastic | 0.75 lb. per unit of product |
Wood | $8.00 per ft. |
Plastic | $1.20 per lb. |
Birdhouse: | |
Fabrication Department | 0.20 hr. at $15 per hr. |
Assembly Department | 0.30 hr. at $12 per hr. |
Bird Feeder: | |
Fabrication Department | 0.40 hr. at $15 per hr. |
Assembly Department | 0.35 hr. at $12 per hr. |
Indirect factory wages | $80,000 |
Depreciation of plant and equipment | 25,000 |
Power and light | 8,000 |
Insurance and property tax | 2,000 |
Sales salaries expense | $90,000 |
Advertising expense | 20,000 |
Office salaries expense | 18,000 |
Depreciation expense—office equipment | 800 |
Telephone expense—selling | 500 |
Telephone expense—administrative | 200 |
Travel expense—selling | 5,000 |
Office supplies expense | 250 |
Miscellaneous administrative expense | 450 |
Interest revenue | $300 |
Interest expense | 224 |
Required:
1. Prepare a sales budget for January.
Birds of a Feather Inc. Sales Budget For the Month Ending January 31 |
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Unit Sales Volume |
Unit Selling Price |
Total Sales | |
Birdhouse | |||
Bird feeder | |||
Total revenue from sales | $ |
2. Prepare a production budget for January.
Birds of a Feather Inc. Production Budget For the Month Ending January 31 |
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Units | ||||
Birdhouse | Bird Feeder | |||
Expected units to be sold | ||||
Plus desired inventory, January 31 | ||||
Total | ||||
Less estimated inventory, January 1 | ||||
Total units to be produced |
3. Prepare a direct materials purchases budget for January.
Birds of a Feather Inc. Direct Materials Purchases Budget For the Month Ending January 31 |
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---|---|---|---|
Wood | Plastic | Total | |
Required units for production: | |||
Birdhouse | |||
Bird feeder | |||
Plus desired units of inventory, January 31 | |||
Total | |||
Less estimated units of inventory, January 1 | |||
Total units to be purchased | |||
Unit price | $ | $ | |
Total direct materials to be purchased | $ | $ | $ |
4. Prepare a direct labor cost budget for January.
Birds of a Feather Inc. Direct Labor Cost Budget For the Month Ending January 31 |
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---|---|---|---|---|---|---|
Fabrication Department |
Assembly Department | Total | ||||
Hours required for production: | ||||||
Birdhouse | ||||||
Bird feeder | ||||||
Total | ||||||
Hourly rate | $ | $ | ||||
Total direct labor cost | $ | $ | $ |
5. Prepare a factory overhead cost budget for January.
Birds of a Feather Inc. Factory Overhead Cost Budget For the Month Ending January 31 |
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---|---|---|
Indirect factory wages | ||
Depreciation of plant and equipment | ||
Power and light | ||
Insurance and property tax | ||
Total | $ |
6. Prepare a cost of goods sold budget for January. Work in process at the beginning of January is estimated to be $29,000, and work in process at the end of January is estimated to be $35,400.
Birds of a Feather Inc. Cost of Goods Sold Budget For the Month Ending January 31 |
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---|---|---|---|
Direct materials: | |||
Cost of direct materials available for use | |||
Cost of direct materials placed in production | |||
Total manufacturing costs | |||
Total work in process during the period | |||
Cost of goods manufactured | |||
Cost of finished goods available for sale | |||
Cost of goods sold | $ |
7. Prepare a selling and administrative expenses budget for January.
Birds of a Feather Inc. Selling and Administrative Expenses Budget For the Month Ending January 31 |
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Selling expenses: | |||
Sales salaries expense | |||
Advertising expense | |||
Telephone expense—selling | |||
Travel expense—selling | |||
Total selling expenses | |||
Administrative expenses: | |||
Office salaries expense | |||
Depreciation expense—office equipment | |||
Telephone expense—administrative | |||
Office supplies expense | |||
Miscellaneous administrative expense | |||
Total administrative expenses | |||
Total operating expenses | $ |
8. Prepare a budgeted income statement for January.
Birds of a Feather Inc. Budgeted Income Statement For the Month Ending January 31 |
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---|---|---|---|
Selling and administrative expenses: | |||
Total selling and administrative expenses | |||
Other revenue: | |||
Other expenses: | |||
$ |
Ans. 1 | Birding Homes & Feeders Inc. | |||||
Sales Budget | ||||||
For the Month Ending January 31 | ||||||
Unit Sales Volume (a) | Unit Selling Price (b) | Total Sales (a*b) | ||||
Bird house | 6000 | $55 | $330,000 | |||
Bird feeder | 4500 | $75 | $337,500 | |||
Total revenue from sales | $667,500 | |||||
Ans. 2 | Birding Homes & Feeders Inc. | |||||
Production Budget | ||||||
For the Month Ending January 31 | ||||||
Particulars | Bird house | Bird feeder | ||||
Expected units to be sold | 6000 | 4500 | ||||
Add: Desired ending finished inventory | 340 | 200 | ||||
Total required units | 6340 | 4700 | ||||
Less: Beginning finished inventory units | -300 | -240 | ||||
Units to be produced | 6040 | 4460 | ||||
Ans. 3 | Birding Homes & Feeders Inc. | |||||
Direct Materials Purchases Budget | ||||||
For the Month Ending January 31 | ||||||
Wood | Plastic | Total | ||||
Required units for production: | ||||||
Bird house | 4832 | 3020 | ||||
Bird feeder | 5352 | 3345 | ||||
Add: Desired units of ending materials inventory | 180 | 210 | ||||
Total units available | 10364 | 6575 | ||||
Less: Estimated beginning materials inventory | -220 | -250 | ||||
Total units to be purchased | 10144 | 6325 | ||||
(*) Unit price | $8.00 | $1.20 | ||||
Total direct materials to be purchased | $81,152 | $7,590 | $88,742 | |||
*Calculations: | ||||||
Required units for production = Units produced * Materials required per unit | ||||||
Wood | Plastic | |||||
Required units for production: | ||||||
Bird house | 6,040 * 0.80 ft | 6,040 * 0.50 lb | ||||
Bird feeder | 4,460 * 1.20 ft | 4,460 * 0.75 lb | ||||
Ans. 4 | Birding Homes & Feeders Inc. | |||||
Direct Labor Cost Budget | ||||||
For the Month Ending January 31 | ||||||
Fabrication Department | Assembly Department | Total | ||||
Hours required for production: | ||||||
Bird house | 1208 | 1812 | ||||
Bird feeder | 1784 | 1561 | ||||
Total | 2992 | 3373 | ||||
(*) Hourly rate | $15.00 | $12.00 | ||||
Total direct labor cost | $44,880 | $40,476 | $85,356 | |||
*Calculations: | ||||||
Hours required for production = Units produced * Direct labor hours per unit | ||||||
Fabrication Department | Assembly Department | |||||
Hours required for production: | ||||||
Bird house | 6,040 * 0.20 hr. | 6,040 * 0.30 hr. | ||||
Bird feeder | 4,460 * 0.40 hr. | 4,460 * 0.35 hr. |